Should Netflix, Inc. Investors Care That 24 Million People in China Are Watching "House of Cards"?

Kevin Spacey in character as House of Cards anti-hero Frank Underwood. Image source: Netflix.

Netflix already has a hit in China. House of Cards is popular in Beijing, even though Netflix hasn't launched services in the Middle Kingdom yet.

Sohu.com is not only one of China's most popular online search and advertising businesses, but also runs a digital video service on the side. And Sohu added the second season of House of Cards at the same time as Netflix customers in Europe and the Americas got their hands on it.

The show is popular among Chinese government workers and the Beijing middle class, Sohu told The Washington Post. Interest in American politics is high, because Washington, D.C., is often seen as the enemy. Keep your friends close and your enemies even closer.

Image source: Netflix.

But don't expect Netflix to report a huge windfall from this one-off agreement. You see, Sohu ran the first season of House of Cards as well. Straight-up Netflix customers got the first 13 episodes on Feb. 1, 2013; Sohu launched the same slate on March 4. Sohu says that more than 24 million viewers tuned in to Season 1, which isn't far from the 33 million customers in Netflix's domestic market.

Neither Netflix nor Sohu have announced the terms of this deal. Netflix is something of a braggart, which points to a pretty small contract here.

These are potential game-changers for Netflix, and a combination of forward-thinking opportunity plus tradition-breaking risk for Disney or AMC. We still don't know the dollar figures involved, but Netflix made sure that the word got out.

Licensing a single show to a third-party distributor like Sohu is nowhere near as big, bold, and important. No, not even when it's an important show like House of Cards, making its way into the world's largest consumer market. And it doesn't even look like Netflix is reaching for brand awareness here. Sohu's presentation of House of Cards has minimal Netflix branding, and is more likely thought of as a "Western show" rather than a Netflix property.

The headlines about House of Cards in China this week aren't pointing to a brand-new big-time deal. They're just reminding us of an existing relationship that was too small to trumpet from the rooftops a year ago.

This is not a sign of an impending Netflix launch in China, not an incoming paycheck large enough to move Netflix's needle, and frankly not a big deal. It's not even a broad deal between Netflix and Sohu. It's just a tiny one-show arrangement that makes sense for both parties, with no earth-shaking consequences on either side of the Pacific.

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